Goldman Sachs Remains Bullish on Kimberly-Clark, Sees Room for Growth
In a recent analysis, Goldman Sachs analyst Bonnie Herzog reaffirmed her Buy rating on Kimberly-Clark Corporation (KMB) stock, projecting a price target of $152. Despite the company’s recent earnings report that saw a slight miss on revenue expectations, Herzog remains optimistic about Kimberly-Clark’s future.
The company reported adjusted earnings per share of $1.83 for the third quarter, exceeding the Wall Street consensus of $1.70. However, quarterly revenues of $4.952 billion fell short of the analyst consensus of $5.048 billion.
Despite the revenue miss, Herzog believes that Kimberly-Clark’s management efforts in driving productivity and the current market conditions are ripe for margin expansion. She highlights that the market is underestimating the company’s potential for significant gross margin growth, a key driver of healthy EPS growth, even with increased reinvestments.
Herzog’s confidence stems from Kimberly-Clark’s ongoing segment reorganization, which she anticipates will lead to improved execution going forward. She sees a compelling risk/reward scenario for investors, as the company’s improving fundamentals stand in stark contrast to its deeply discounted valuation compared to its peers in the household and personal care (HPC) sector.
Herzog’s projections indicate that adjusted EBIT is poised for mid-to-high teens growth on a constant currency basis. Similarly, adjusted EPS is projected to rise at a comparable rate. For the fourth quarter of 2024, organic sales growth is expected to reach approximately 4% at the midpoint, slightly below Goldman Sachs’ estimate of 5.0%. The projected all-in EPS stands at $1.46, with a range of $1.33 to $1.60. This reflects a constant currency growth rate of 15% to 19%, exceeding Goldman Sachs’ estimate of $1.60.
KMB Stock Performance
At the time of this writing, KMB shares are trading lower by 4.30% to $138.01.
Key Takeaways
* Goldman Sachs remains bullish on Kimberly-Clark, citing the company’s strong growth potential driven by productivity initiatives and favorable market conditions.
* Despite missing revenue estimates, the analyst expects Kimberly-Clark to see margin expansion and healthy EPS growth, driven by robust gross margin expansion.
* The market may be undervaluing Kimberly-Clark’s growth potential, offering an attractive entry point for investors.
* The company’s segment reorganization is expected to enhance execution moving forward.
